The new version of Office is a huge shift for Microsoft — here's why

Today, Microsoft Office 2016 comes out for Windows 7 and
later, bringing with it a slew of new capabilities and features.

Office 2016's headlining changes are mainly focused around
helping users work with each other between the desktop, browser,
and mobile apps. There aren't a lot of surprises, especially
since Office 2016 has been available in beta form
since early this year.

But the biggest surprise is how Microsoft is now thinking of
Office. As recently as 2013, Office was a big new product that
companies and consumers were supposed to buy every release or
two.

This time, Microsoft is making it clear that it's going to keep
releasing tiny updates and experimental apps on an ongoing basis.
This, combined with the way Microsoft has priced it, means
it makes more sense to subscribe Office 365 — and get
updates like Office 2016 for free — than it does to buy the new
packaged product.

Office is irrelevant. Long live Office 365.

First, what's new?

The new Word 2016 lets users collaborate with each other directly
from within the document, Google Apps-style. Meanwhile, a new
integration with Skype for Business in all of the desktop Office
apps means that it's a lot easier to stream your screen to a
colleague or just start a video chat.

Real-time
collaboration in Microsoft Word 2016, with a Skype for Business
chat on the side.Microsoft

Otherwise, the updates are nice, but not game-changing.
For instance:

An upgrade to Microsoft
Outlook lets it intelligently sort your inbox, a little like
Gmail's priority inbox or the stellar Outlook for iOS.

Excel gets new chart types,
as well as the ability to publish data directly to Power BI,
Microsoft's business analytics tool and a
big focus for the company. A new tool called "Smart Lookup" lets
you grab data from Bing or Wikipedia directly from a sidebar
while editing a document,
kind of like Google Apps does.

If you subscribe to Office
365, you get a new "Groups" feature where you can throw a team
together in Outlook 2016 with a shared calendar and dedicated
cloud storage for project files.

A "recently used" documents prompt in the toolbar that shows
the last Office document you were working on, no matter which
device.

Enterprise customers of Office 365 are also getting some new
data-loss prevention tools to make sure unscrupulous third
parties aren't intercepting any data.​

A push toward subscriptions

The real change is in how Microsoft thinks about Office updates
for the future.

The last major version of Microsoft Office for Windows, Office
2013, was released over two and a half years ago. Just this
past summer, Office 365 subscribers got access to Office 2016 for
the Mac — but before that, the last version was released in
2011.

Microsoft Office 2016's
newMicrosoft

But you won't have to wait that long for cool new features
in Office 2016.

"With this release, we’re also shifting the cadence of Office on
Windows to feel much more like the cadence we have on the Office
mobile and web apps, which release every month with new value,"
writes Microsoft's Office VP Kirk Koenigsbauer in a blog
post.

That's right: He said Office on the desktop is going to get
lots of new features every month. You won't have to
wait two or three years for the next version.

For instance, Koenigsbauer's post promises that "in the
coming months," Cortana, the digital assistant that
comes with Windows 10, will get the ability to search and read
your Outlook e-mail — you know, like "Hey Cortana, what was
in that last e-mail from Bob?"

You can get Microsoft Office 2016 for Windows and Mac as
one-time, boxed software releases just as you've always bought
them if you really want to. The Home & Student edition is
$149, and Home & Business is $229.

But for their $6.99-plus a month, Office 365 subscribers can get
the full versions of Microsoft Office 2016 for the
desktop right now, plus the promise of these rolling
upgrades, for as long as you keep paying.

It's been a successful sales pitch for Microsoft so far, with
Office 365 actually cannabalizing sales of the boxed version of
Office.

Making the money make sense for Microsoft

But in the long term, Microsoft stands to make a lot of
money — the subscription-based model can earn up to
80% more cash over the lifetime of each
customer. Plus, since you get access to smartphone apps and
Mac versions of the software, too, it
re-positions Office as the center of the company, as Windows
becomes less relevant in the broader market.

Plus, Office 365 has proven to be an effective vehicle for
introducing experimental new apps, like the PowerPoint
alternative/killer Sway or the forthcoming GigJam
work-sharing tool, to a paying audience.

Which means that Office 2016 signals a shift in how Microsoft
sells you Office: Buy it once, and you get a good product. But
cough up your cash regularly, and Office will get better,
forever.